Retailer’s store will be more than a cannabis store, it will be an experience of the lifestyle portrayed by Life’s branding. Only a small portion of Retailer’s square footage will be dedicated to cannabis products, while the majority of the store will house non-cannabis, Life branded items. This will minimize the non-deductible expenses that are deemed sales/trafficking related and allow for a bifurcation of expenses between non-cannabis and cannabis business lines. The non-cannabis business line will be able to deduct expenses similar to any other business, further reducing the impact of Sec. 280E. (See CHAMPS v. Commissioner)
In this scenario, we would advise that Life either become either a C-corp or S-corp in order to avoid Self-employment tax. This choice would not be cut and dry and would depend on various factors such as the state, tax situations of the individual owners, and fringe benefit desires of the owners among others.
Ben, a partner at BC Consulting and BC CPAs, is a proud native of the Pacific Northwest, born in Washington and grew up in Oregon. He earned his bachelor’s and master’s degrees in accounting from the University of Oregon. He has been an active CPA in the state of Oregon since 2008 and has extensive business tax experience focusing on corporate and flow-through entities.
He has a combined 9 years of Big 4 experience at Ernst & Young and Deloitte and has served clients ranging from large multistate, multinational Fortune 500 companies to startups and every size in between. His clients represent various industries including commercial and residential real estate, manufacturing, private equity funds, hedge funds, biotech, and high-tech.
Ben puts his broad ranging and unique skill set to work benefiting clients within the cannabis industry. When he isn’t serving his clients, Ben enjoys traveling (36 countries and counting), craft beer and coffee, snowboarding, music festivals, camping and hiking, and going to Ducks, Blazers and Timbers games. In addition to his CPA, he is also certified yoga teacher and scuba diver.
If you would like to have BC Consulting review your returns for possible tax savings, please reach out to Ben at 503-303-3730 or email [email protected]
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